Debenhams shares surge on the back of bumper Christmas online sales

Shares in Debenhams surged in early morning trading on Tuesday 12 January, after the high street retailer posted better-than-expected results over the Christmas period, thanks to a sharp increase in online sales.

In the 19 weeks to 9 January, like-for-like sales at the FTSE 250 group rose 1.9% year-on-year, comfortably beating analysts' expectations for a 0.3% gain, while sales in the nine weeks to 9 January grew 1.8% from the corresponding period in 2014.

The better-than-expected results were largely due to a strong performance in the company's online department, which saw sales grow 12% year-on-year and 36% in the week leading up to Christmas.

Online orders rose 20% from the corresponding period in 2014, as the company said it processed 220 orders a minute during Black Friday, while on the day store sales were four times higher than in the previous year.

"We have enjoyed a record Christmas trading period including our best ever December and Christmas week," said group chief executive Michael Sharp, who is set to bring his 25-year spell with the company to an end later this year.

"We are particularly pleased with our performance in beauty and gifts, where we delivered a good result in store, along with strong online sales supported by robust systems, an ever-improving supply chain and an imaginative and joined up marketing campaign."

Debenhams, which opened five new stores across England and Wales late in 2015, said it sold a total of nine million seasonal gifts in the lead up to Christmas, including two million toys and three million food-related gifts.

In the toys department, Lego and Star Wars products were by far the most popular, with the store selling more than 70,000 Star Wars items, including 8,000 light sabers and over 85,000 Lego Boxes.

Meanwhile, sales of well-being and fitness products rose 50% in the period, driven by a marked increase in Fit Bit purchases. In its clothing department, the group reduced its outwear stocks, successfully limiting the impact of the warm winter weather that weighed on quarterly results at Next, Marks & Spencer and Sports Direct.

Debenhams added that the performance over the first quarter of its financial year put it on track to meets its annual targets.